UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                  FORM 10-KSB

  X Annual Report Pursuant to Section 13 or 15 (d) of the Securities Exchange
                                  Act of 1934
                  For the fiscal year ended: February 29, 2004

                                       or

      Transition Report Pursuant to Section 13 or 15 (d) of the Securities
                              Exchange Act of 1934

                         Commission File Number: 0-7900

                          LIFE PARTNERS HOLDINGS, INC.
                 (Name of small business issuer in its charter)

        Texas                                                   74-2962475
State of incorporation)                                 (I.R.S. Employer ID No.)


                                  204 Woodhew
                                Waco, Texas 76712
              (Address of Principal Executive Offices) (Zip Code)

          Issuer's telephone number, including area code: 254-751-7797

        Securities registered pursuant to Section 12(b) of the Act: None

          Securities registered pursuant to Section 12(g) of the Act:

                    Common Stock (par value $0.01 per share)
                                (Title of Class)
..
Check  whether  the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or
for  such shorter period that the Registrant was required to file such reports),
and  (2)  has  been subject to such filing requirements for at least the past 90
days.  Yes  [X]  No  [ ]

Check  if  there  is  no disclosure of delinquent filers pursuant to Item 405 of
Regulation  S-B  contained  herein,  and  will  not be contained, to the best of
Registrant's   knowledge,  in   definitive   proxy  or   information  statements
incorporated  by  reference  in Part III of this Form 10-KSB or any amendment to
this  Form  10-KSB.  [ ]

Revenues  of  issuer  for  year  ended  February  29,  2004:  $15,596,825

Aggregate  market  value  of  voting  stock held by non-affiliates as of May 17,
2004:  $22,818,796

Shares  of  Common  Stock,  $.01  par  value,  outstanding  as  of May 17, 2004:
9,474,785

                      DOCUMENTS INCORPORATED BY REFERENCE

Our  definitive  proxy  statement  in  connection  with  the  Annual  Meeting of
Shareholders  to  be  filed  with  the Commission pursuant to Regulation 14A, is
incorporated  by  reference  into  Part  II, Item 5 and Part III of this report.


<PAGE>

                          LIFE PARTNERS HOLDINGS, INC.

                         2004 Form 10-KSB Annual Report
                                Table of Contents

Item                                                                   Page  No.

                                     Part I

          Special  Note  Regarding  Forward-Looking  Statements             3
1.        Description  of  Business                                         3
          Risk  Factors                                                     9
2.        Description  of  Property                                        14
3.        Legal  Proceedings                                               14
4.        Submission  of  Matters  to  a  Vote  of  Security  Holders      14

                                    Part II

5.        Market  for  Our  Common  Stock,  Related  Shareholder
          Matters and  Our  Purchases  of  Equity  Securities              14
6.        Management's  Discussion  and  Analysis                          15
7.        Financial  Statements                                            20
8.        Changes  in  and  Disagreements  with  Accountants  on
          Accounting  and  Financial  Disclosures                          20
8A.       Controls  and  Procedures                                        20

                                    Part III

9.        Directors  and  Executive  Officers                              20
10.       Executive  Compensation                                          20
11.       Security  Ownership  of  Certain  Beneficial  Owners
          and  Management and  Related  Shareholder  Matters               20
12.       Certain  Relationships  and  Related  Transactions               21
13.       Exhibits  and  Reports  on  Form  8-K                            21
14.       Principal  Accountant  Fees  and  Services                       21
          Signatures                                                       22





                                        2
<PAGE>

                                     PART I

Special  Note  Regarding  Forward-Looking  Statements

     Certain  statements  in  this  annual  report on Form 10-KSB concerning our
business  prospects  or  future  financial  performance:  anticipated  revenues,
expenses, profitability or other financial items, growth in the viatical or life
settlement  markets  or  our  projected  sales  in such markets, developments in
industry  regulations  and  the  application   of  such   regulations,  and  our
strategies,  plans  and  objectives, together with other statements that are not
historical facts, are "forward-looking statements" as that term is defined under
the  Federal securities laws.  All of these forward-looking statements are based
on  information  available to us on the date hereof, and we assume no obligation
to  update  any  such  forward-looking  statements.  Forward-looking  statements
involved  a  number of risks, uncertainties and other factors, which could cause
actual  results  to  differ  materially  from  those  stated in such statements.
Factors  that could cause or contribute to such differences include, but are not
limited  to,  those discussed in this annual report on Form 10-KSB, particularly
in  the  sections  entitled  "Item  1  -  Business - Risk Factors" and "Item 6 -
Management's  Discussion  and  Analysis".  We do not undertake any obligation to
release  publicly  any  revisions  to such forward-looking statements to reflect
events  or  uncertainties  after  the  date  hereof or reflect the occurrence of
unanticipated  events.

Item  1.  Description  of  Business

Life  Partners

     General.  Life  Partners  Holdings,  Inc.  ("We" or "Life Partners") is the
parent company of Life Partners, Inc. ("LPI").  LPI is the oldest and one of the
largest viatical settlement companies in the United States.  To supplement LPI's
viatical  business, we have expanded our operations and services to include life
settlement transactions, which we believe will emerge as a market surpassing the
viatical  market.

     The Viatical and Life Settlement Business. LPI was incorporated in 1991 and
has  conducted  business under the registered service mark "Life Partners" since
1992.  Until  this  fiscal year, our revenues have been principally derived from
fees  for facilitating the purchase of viatical settlement contracts. A viatical
settlement  is the sale of a life insurance policy by a terminally ill person to
another  party.  By  selling  the  policy,  the  insured  (a viator) receives an
immediate  cash  payment  to  use  as  he  or she wishes. The purchaser takes an
ownership  interest  in  the policy at a discount to its face value and receives
the  death benefit under the policy when the viator dies. To date, purchasers of
viatical  settlements  have  generally  been high net worth individuals or small
institutional  purchasers.

     A life settlement differs from a viatical settlement in that the insured in
a  life settlement is not terminally ill, is 65 years of age or older, and has a
life  expectancy of ten years or less. Senior life settlements appeal to persons
who  purchased  life  insurance for income protection or estate planning, but no
longer  need the insurance due to growth in their investment portfolios or other
changes  in  circumstances.  The  settlements also appeal to persons who want to
make immediate gifts to their beneficiaries. In these instances, the insured may
feel  the  insurance  is  no  longer  needed.  Because these policies often have
substantially larger face values, their acquisition costs are higher. Therefore,
purchasers  of  life  policies  are  generally  large  institutional purchasers.

     Since  the  market  for  viatical  settlements  has  grown  to include life
expectancies  that  are  often  associated with life settlements and the age and
medical condition of many life settlors gives them a life expectancy that is the
same  as  many  viators,  the  distinction between these two market segments has
diminished  and  the  markets have largely merged. State regulations govern both


                                        3
<PAGE>

types  of  transactions  in the same manner and the services we provide for both
types  of  transactions  are  the  same.  Thus,  we  view both viatical and life
settlements  to  be  within  the  same  line  of business and do not distinguish
between  them  for  financial  reporting  purposes.

     Our role in a viatical or life settlement transaction is the same. We match
viators  or  life  settlors with purchasers. We facilitate these transactions by
identifying, examining, and purchasing the policies as agent for the purchasers.
LPI  locates  potential  viators and life settlors through a network of brokers,
insurance,  financial  and  estate  planning  professionals,   through  personal
referrals  and  through  Internet  and  print  media  advertising.  Brokers  are
typically  compensated  based  on  a  percentage of the face value of a viator's
policy,  which  is  paid upon the closing of a settlement, while estate planning
professionals  and  financial  planners often operate on a fee-for-service basis
which  is  paid  directly  by their client. We have long-term relationships with
most  of  the  country's  viatical  and life settlement brokers and believe that
these brokers adhere to applicable regulatory requirements when conducting their
business. In the fiscal year ended February 29, 2004, broker referrals accounted
for  75%  of  our business. Policies presented by two brokers constituted 57% of
all  transactions  closed  during  the  fiscal  year.

     Purchasers generally come to us through a network of financial planners. We
develop this network through referrals and have long-standing relationships with
most  of  the  financial  planners.  Although  these  financial  planners can be
compensated through fee-based consultations paid by the purchaser, we compensate
most of the financial planners based on the amount invested. The compensation of
financial planners may consist of cash paid on settlement, and in certain cases,
through  a  stock  option plan provided by us based on the volume of a financial
planner's activity. We have also developed and continue to develop relationships
with  institutional  purchasers,  either  directly  or  through advisors to such
institutional  purchasers.

     To  purchase  a  viatical or life settlement, a prospective purchaser first
submits a purchaser application, which contains personal information such as the
purchaser's name and address as well as affirmative representations establishing
the  purchaser  as  financially  sophisticated.  A purchaser will also submit an
agency  agreement  and special power of attorney, which appoints us as a limited
agent  of  the  purchaser  to  act on his or her behalf in purchasing a viatical
settlement.  Unless  specifically  waived  by  a purchaser, the agency agreement
limits  our  authority to policies issued by an insurance carrier having an A.M.
Best  rating  of  A-  or  better,  to  policies  beyond their contestable period
(generally  two  years  or  older), and, in the case of viatical settlements, to
insureds diagnosed as terminally ill. While in the past most insureds have had a
life  expectancy  of  48 months or less, we have expanded this market to include
insureds  with  life  expectancies of up to seven years for viatical settlements
and  up to 15 years for life settlements, depending on the individual purchasing
parameters  of  the  client.  We  issue each financial planner and client a user
identification number and password which allows access to our restricted website
containing  lists  of  available  policies  and medical case histories (with the
viator's  name  and  other  identifying  information  redacted).  We  also  make
available  to  each financial planner standard disclosures discussing the nature
and  risks  of  viatical   settlement  purchases.   A  purchaser  can  then,  in
consultation  with  his  financial  planner  or other professionals available to
them, select one or more policies, specify the portion of the policy or policies
to  be  purchased (to diversify their positions, individual purchasers generally
buy fractional interests in one or more policies and not an entire policy, while
institutional  purchasers  tend  to  purchase  entire  policies),  and  submit a
reservation  form  either  electronically  or  by  fax.  At  the  same time, the
purchaser  mails or wires the acquisition price to the escrow agent and mails or
faxes  a policy funding agreement to us. The policy funding agreement identifies
the  policy   or  policies   to  be  purchased,  the   acquisition  price,   the
administrative  services  provided,  and the escrow arrangements for receipt and
disbursement  of  funds.  In  essence,  we  act  upon  the  instructions  of the
purchasers  as  their  purchasing  agent.


                                        4
<PAGE>


     For  the  protection of the seller's ownership interest and the purchaser's
monetary  interest,  all  transactions  are closed through an independent escrow
agent,  Sterling  Trust  Co. ("Sterling"), which is a wholly-owned subsidiary of
Matrix  Bancorp, Inc. (Nasdaq NMS: MTXC). Sterling will close a purchase when it
receives  from purchasers executed policy funding agreements and the acquisition
price  for  a  policy,  verifies that the policy is in full force and effect and
that no security interest has attached to the policy, and receives a transfer of
policy  ownership form acknowledged by the insurance company. Sterling then pays
the  seller  the offer price (net of fees and costs). After the closing, we send
confirmation  of  the  transaction  to  the  purchaser  as well as a copy of the
assignment  documents.

     After  closing  the  transaction,  we generally hold title to the policy as
nominee for the purchaser. Responsibility for policy premium costs passes to the
purchaser, who typically funds the premium costs through deposits with Sterling.
A  viator's  or  life settlor's personal information is protected by regulations
promulgated  by  the  Texas  Department of Insurance. A purchaser will receive a
copy  of  the policy and the transfer of ownership (which has the viator or life
settlor  named as the insured), but will not receive viator contact information,
which  is available only to licensed viatical companies (like Life Partners). We
monitor the viators' health status and notify Sterling upon their death. We also
notify  purchasers  in  instances  in  which the premium escrow account has been
exhausted  so  that  the  purchaser can replenish the account to keep the policy
from  lapsing.

     We  pioneered the foregoing transaction design and, since our formation, we
have  participated  in the purchase of viatical and life settlement transactions
totaling  almost  $431  million  in  face  value.

     The  Viatical  and  Life  Settlement  Market  and Competition. According to
public  filings,  we  estimate  that  the  total face value of viatical and life
settlement  transactions  completed  during 2003 was approximately $927 million.
This  figure gives us a market share of approximately 4%. However, these figures
were  reported  prior  to  any  significant  life  settlements transacted by our
company  and  many  of  our  competitors  do  not  compete  with us for viatical
settlements.  In  addition,  our  largest  competitor was recently shut down and
removed  from  the  market  by  state  and  federal  regulators.  We expect this
intervention  to have a severe and negative effect on our competitor, especially
among  institutional  clients  who  are  concerned  about reputation risk and we
expect  a significant portion of that competitor's institutional clients to turn
to  us  as  a  provider  of life settlement services. The life settlement market
emerged  out  of  the viatical settlement market because the transactions are so
similar in nature. Whether an insured has a reasonably definable life expectancy
because  he or she is terminally ill or because of advanced age, a present value
for  the  policy  can  be  reasonably  calculated.  This  is the essence of both
viatical  and  life  settlement transactions. Further, we have developed markets
for  all types of life expectancies in order to accommodate the investment goals
of our clients as well as the individual circumstances of the policies presented
to  us.

     We  believe  the  viatical  and  life  settlement market will substantially
increase  due  to  a  number  of  factors.  First, market demand from purchasers
remains  very  strong  for  these  transactions.  While  our  historical core of
individual  purchasers  continue  to  have  a  high  degree  of interest in life
expectancies  between  two  and  seven years, we have also developed substantial
interest  from and purchased policies for institutional purchasers which tend to
favor  longer  life  expectancies.  Whether  the  purchaser  is a high net worth
individual  or  an  institution, we believe this strong market demand is due, in
part, to a continued cautious attitude of purchasers toward the stock market and
continued  low yields from interest bearing instruments. In addition, we believe
we have successfully educated many individual and institutional purchasers about
the  potential  returns  available  from  viatical  and life settlements and the
inherent  diversity they offer from traditional types of investments. We believe


                                        5
<PAGE>

the  general  economic  uncertainty fostered by our current economy has led many
purchasers  to  seek  alternative  investment  strategies  that  diversify their
portfolios  and  avoid  economically  sensitive  investments.  Viatical and life
settlements  provide  diversification  and  are  largely  immune  from  economic
downturns.  We  believe  that  interest  from  both individual and institutional
purchasers  will  continue  to  grow  steadily  throughout the next fiscal year.

     Because newer medical treatments have improved the longevity and quality of
life of some terminally ill individuals, we have responded to the effects of the
newer  medical  treatments by tightening our policy analysis standards, reducing
offer  prices  to  viators  to  reasonably  adjust  for the present value of the
policy,  and  expanding  our  markets  to   include  viators  with  longer  life
expectancies.  While  we  accept  policies presented by viators with any type of
terminal  illness,  over  90% of the viatical settlements we facilitate are with
viators  living  with  AIDS.

     In  response  to  the  development  of  viatical  and life settlements, the
insurance  industry  has   responded  with   policy  features  offering  various
pre-death, cash benefits (sometimes called accelerated death benefits). While in
some  cases accelerated death benefits may compete with viatical settlements, we
do  not expect that the availability of accelerated death benefits to affect the
viatical  market  significantly  at  this  time. The availability of accelerated
death  benefits  is  generally  more  restricted  than viatical settlements. For
example,  policies  often  limit  such  benefits  to  persons  who  have  a life
expectancy  of  less than one year, in contrast to viatical settlements that are
usually  available  to persons with remaining life expectancies of four years or
longer.  Viatical  settlements generally offer viators greater amounts than they
would receive under accelerated death benefit provisions. An insurance company's
willingness  to offer a competitive accelerated death benefit, and the amount of
such  benefit,  may  be affected by imputed policy lapse rates. The availability
and amount of an accelerated death benefit negatively impacts lapse rates, which
could  increase  policy  rates.  The  competition for new policies limits policy
rates  and  may,  indirectly,  limit  the availability and amount of accelerated
death  benefits.  In  addition,  we  are aware of at least one insurance company
actively  purchasing life settlements using one of our competitors as its agent.

     The  viatical  and  life  settlement market has been negatively affected by
some companies using illegal or questionable business practices. We believe that
state  and  federal regulators have effectively identified and shut down most of
the  companies  that  were  engaged  in  such practices. The result of these law
enforcement  actions  has  been  to  reduce  the  amount of competition for both
policies  and  purchasers.  Although state and federal law enforcement officials
successfully  employed  existing  laws  to  curb  these illegal practices, state
legislatures  and  insurance regulators have passed laws and adopted regulations
requiring  the  licensing of viatical brokers and settlement companies, mandated
disclosures to viators or purchasers or both, and instituting periodic reporting
requirements,  and setting forth prohibited business practices. We believe these
laws and regulations have generally had a positive effect on the industry and on
our  ability  to  compete  in  the  viatical  marketplace.  We are licensed as a
viatical and life settlement company in the State of Texas and information about
us  is available through the Texas Department of Insurance or on its website at:
https://wwwapps.tdi.state.tx.us/pcci/pcci_show_profile.jsp?tdiNum=8967842.

     The  foregoing  developments  -  improved medical treatments, the insurance
industry's  addition  of  pre-death  cash  benefits, law enforcement pressure on
companies  operating  illegally  and  increasing  government  regulation  - have
decreased  the  number  of  viatical  and  life settlement companies, both those
purchasing  for their own accounts and those, like us, who act as agents for our
purchasers.  We  estimate  the  number of viatical and life settlement companies
actively  purchasing  for  their  own  account or as agents for purchasers to be
fewer  than five and the number of viatical and life settlement brokers at about
25.  We  are  unaware  of  any  company  that   purchases  viatical  settlements
exclusively.  The  market has matured and developed to a point where there is no
effective  market  distinction  between  viatical  and  life  settlements.   Our


                                        6
<PAGE>

competitors  purchase  either  life  settlements  exclusively  or,  like  us,  a
combination of viatical and life settlements. While we believe we are one of the
largest  viatical and life settlement companies (based on face value of policies
settled),  competition  within the viatical and life settlement market is active
among  the  few  companies  in  this  sector  and we will continue to experience
competition  for  new  viators  and life settlors. This competition will have an
effect  on  the prices we pay viators and life settlors, the amount of brokerage
and  referral fees we pay and the prices we set for the acquisition of policies.
We believe the overall market for viatical and life settlements will increase as
more  seniors  become  aware  of  their  option  to liquidate an unwanted policy
through  a  life  settlement.  In  light  of  our  experience in the market, our
purchaser  network  and  continued regulatory pressure within the industry (from
which we benefit), we believe our market share for viatical and life settlements
will  increase  to $70 to $80 million in face value for the fiscal year 2004. We
base  this  substantial  increase  primarily on the substantially larger average
face  values  of life settlement policies, as well as the increase in demand for
viatical  settlements with longer life expectancies. In our last fiscal year, we
handled  over  $41.7  million in face value, down slightly from $43.6 million in
2003.

     The  following  table  shows  the  number  of  viatical and life settlement
contracts  we  have transacted, the aggregate face values and purchase prices of
those  contracts,  and  the  revenues  we  derived,  for  our fiscal years ended
February  28,  2002,  February  28,  2003  and  February  29,  2004:

<TABLE>
<CAPTION>
                                         2002         2003         2004
                                         ----         ----         ----
<S>                                    <C>          <C>          <C>
Number of settlements                       172          326          333
Face value of policies (in '000's)     $ 12,499     $ 43,629     $ 41,953
Average revenue per settlement         $ 26,663     $ 37,357     $ 46,837
Net Revenues derived (in '000's)(1)    $  2,241     $  6,066     $  8,218
----------------
</TABLE>
     (1) The revenues derived are exclusive of referring  brokerage and referral
         fees.

Industry  Regulation  and  Taxation

     General.  When  the viatical market first arose, it was sparsely regulated.
Due  in part to abuses within the industry, which were well-publicized, both the
federal  government  and  various  states  moved  to  regulate the market in the
mid-1990's.  The  regulations  generally  took  two  forms.  One sought to apply
consumer  protection-type  regulations  to  the  market.  This  application  was
designed  to  protect  both  viators  and  purchasers.  Another  sought to apply
securities  regulations to the market, which was designed to protect purchasers.
Various states have also used their insurance regulations to attack instances of
insurance  fraud  within  the  industry.

     Consumer  Protection  Licensing.  The  consumer protection-type regulations
arose  largely  from the draft of a model law and regulations promulgated by the
National  Association of Insurance Commissioners (NAIC). At least 35 states have
now  adopted  some  version  of  this  model  law  or another form of regulation
governing  viatical  settlement  companies  in  some  way.  These laws generally
require  the licensing of viatical providers and brokers, require the filing and
approval  of  viatical settlement agreements and disclosure statements, describe
the  content  of  disclosures  that  must be made to potential viators, describe
various  periodic  reporting  requirements for viatical settlement companies and
prohibit  certain  business  practices  deemed  to  be  abusive.

     Licensing  in  Texas. We are licensed by the Texas Department of Insurance.
Under  the  Texas  requirements, we must file our transaction documents with the
state for approval, make certain disclosures to viators, offer a 15-day right of
rescission  to  the  viator,  file  certain  annual  reports with the state, and
abstain from unfair business practices. Because all of our transactions occur in
Texas,  the  Department  of Insurance has jurisdiction to investigate complaints
from  any  viator,  irrespective  of  the  state  in  which  that  viator lives.


                                        7
<PAGE>

     In  1999, Texas became the first state to regulate life settlements as well
as  viatical  settlements.  The  Texas regulatory scheme for life settlements is
identical  to  the  regulatory  scheme  applicable  to  viatical settlements. It
requires  licensing  of  providers  and  brokers,  implements  various reporting
requirements  and  mandates required disclosures. Life Partners is licensed with
the  State  of  Texas  as  a  viatical  and  life  settlement  company.

     Securities  Regulations.   Despite  the  apparent   success   of   consumer
protection-type  laws  in  regulating the viatical industry, some states and the
Securities  and Exchange Commission have attempted to treat viatical settlements
as  securities under federal or state securities laws and many have successfully
done  so  in  circumstances  in  which  the  transactions   were  structured  as
securities.  No  state or federal regulatory body has successfully asserted that
our  viatical and life settlements are securities. To the contrary, in an action
brought  by  the  Securities  and Exchange Commission against our company in the
mid-1990's,  the  Court of Appeals for the District of Columbia has specifically
held  that  our transactions, as we structure them, do not constitute securities
under  federal  law.  To  what  extent  viatical settlements may be regulated as
securities  and  the  effect of such regulation on the market is uncertain. Such
regulation  will  not  significantly  affect  senior  life settlements involving
institutional  purchasers,  either  because  of   exemptions  from  registration
available  in institutional transactions or because the settlements will be used
in  collateralized  bond  transactions   that  are  registered  or  exempt  from
registration.

     At  least  20  states  have  either amended their securities laws to define
viatical  settlements  as  securities  or asserted that viatical settlements are
securities  and  announced  their  intention  to  regulate the offer and sale of
viatical  settlements.  To  avoid these developments, we do not perform services
for  purchasers  in  these  states, unless it is for an entity that has properly
registered  the  viatical  settlements as securities or complies with a state or
federal  exemption to that state's securities laws. Federal and state securities
laws  provide  private remedies, which permit individuals to sue under such laws
if  they  can establish that the settlements are securities. We have encountered
one  such action, which was dismissed by the trial court, although the plaintiff
has  appealed  that dismissal. Having successfully defended an action by the SEC
alleging  the  settlements  were  securities, we believe that we will prevail in
suits  alleging  the  sale of "securities", but cannot give assurance that state
regulators  or  private  individuals will not file these types of actions in the
future.  [See  Item  3.  Legal  Proceedings.]

     We believe that a combination of consumer protection-type laws and existing
insurance  regulations  provide  an  appropriate framework for regulation of the
industry.  The  widespread  application of securities laws would, as a practical
matter,  prevent  us  and  other  viatical  and  life  settlement companies from
marketing  settlements  with  little  or  no  benefit to purchasers. Each of our
purchasers  has  represented  themselves  to  be  sophisticated  individuals  or
institutions,  which  have  little  need  for  the  protections  afforded by the
securities  laws.  At  this point, the possible application of such laws has not
had  an  adverse,  material effect on our business, but we cannot give assurance
that  our  business  would  not  be  materially  and  adversely  impacted  by  a
securities-based  action.

     Insurance  Regulation.  As  a  viatical  and  life  settlement  company, we
facilitate  the  transfer  of  ownership  in life insurance policies, but do not
participate  in  the issuance of policies. We are not required to be licensed as
an  insurance  company  or  an insurance professional. We do, however, deal with
insurance  companies  and  professionals  in  our  business  and  are indirectly
affected  by  the  regulations  covering  them. The insurance industry is highly
regulated,  and these regulations affect us in numerous ways. We must understand
the regulations as they apply to policy terms and provisions and the entitlement
to, and collectibility of, policy benefits. We rely upon the protections against
fraudulent  conduct  that these regulations offer and we rely upon the licensing
of  companies  and  individuals  with  whom  we  do  business.


                                        8
<PAGE>

     Taxation.  In  1996,  Congress  passed the Health Insurance Portability and
Accountability  Act.  This  act  exempts  from  taxation  proceeds received in a
viatical  settlement  paid  to  terminally  ill  viators  (those  having  a life
expectancy  of  24  months  or  less) and chronically ill viators (those who are
incapable  of  at least two daily-living activities, such as eating and bathing,
and  require  supervision).  The  tax  exemption  applies  only  if the viatical
settlement  company  is licensed in the state in which the viator resides, or if
the  viator  resides in a state that does not license viatical companies, if the
viatical  company  can  certify  that it complies with the model act provisions.
Because  we  are  licensed in Texas, we believe that, under 1996 act, qualifying
viators will not be subject to federal income tax from viatical settlements that
we  facilitate. Since most states follow the Federal income tax definitions, the
receipt of settlement proceeds is generally exempt for state income tax purposes
also.

     The  act  does  not  exempt the receipt of senior life settlement proceeds.
Senior  life  settlement proceeds would typically be taxed as ordinary income to
the  extent that the proceeds exceed the premiums paid for the insurance policy.

Employees

     As  of  February  29,  2004,  we  had 32 direct employees, none of whom are
represented  by  a  labor  union,  as  well  as  over 1,000 licensees who act as
independent contractors and refer clients to us for the purchase of viatical and
life  settlements. We continuously review benefits and other matters of interest
to  our  employees  and  consider  our  employee  relations  to be satisfactory.

More  about  Life  Partners

     Life  Partners is the successor to IGE, Inc., a publicly held Massachusetts
corporation that was formed in 1971, but had been dormant and without operations
since 1985.  On January 21, 2000, IGE, Inc. acquired LPI in a share exchange and
its  name  was  then changed to Life Partners Holdings, Inc.   Life Partners was
redomesticated  to Texas on February 19, 2003.  Before January 21, 2000, we were
a privately held corporation.  Our executive offices are located at 204 Woodhew,
Waco,  Texas  76712  and our telephone number is 254-751-7797.  Our websites are
www.lifepartnersinc.com  and  www.lpi-investments.com.

                                  RISK FACTORS

     In  addition  to other information in this annual report on Form 10-KSB and
in  the  documents we are incorporating by reference, the following risk factors
should  be  carefully  considered in evaluating us and our business because such
factors  significantly  affect  or  could  significantly  affect  our  business,
operating  results  or  financial  condition.  This annual report on Form 10-KSB
contains  forward-looking  statements  that  have  been  made  pursuant  to  the
provisions  of  the  Private  Securities  Litigation Reform Act of 1995.  Actual
results  could  differ  materially  from  those projected in the forward-looking
statements as a result of the risk factors set forth below and elsewhere in this
annual  report  on  Form  10-KSB.

We  Are  Operating  in  Markets  that  May  Change  Dramatically

     We  are  operating in the viatical and senior life settlement markets.  The
viatical  settlement  market  is  just  over a decade old.  While the market saw
tremendous  growth  in  its initial years, the market growth in recent years has
moderated  somewhat.  The  senior  life settlement market is less than six years
old.  How  and to what extent it will develop is uncertain.  While a 2003 report
by  the  insurance  consulting  firm Conning & Co. estimates the life settlement
market  at  approximately  $2  billion  per  year  in face value, our ability to
originate,  underwrite and place senior life settlements has yet to be tested in
large numbers.  The development of the senior life settlement market will depend


                                        9
<PAGE>

heavily  upon  the  entry  of  institutional purchasers.  Whether we can attract
institutional purchasers will depend on our ability to convince these purchasers
that  we can originate sufficient numbers of qualified policies for purchase and
that  our  policy  analysis  and  pricing  practices  are  sound.

     While  we are among the most experienced and largest companies within these
markets,  our  prospects  must be considered in light of the risks, expenses and
difficulties  encountered  by  those  attempting  to operate in rapidly evolving
markets. We cannot assure you that we will be successful in addressing the risks
we  face.  The  failure  to  do  so  could have a material adverse effect on our
business,  financial  condition,  and  results  of  future  operations.

Our  Operating Results in One or More Future Periods Are Likely to Fluctuate and
May  Fail  to  Meet  Expectations.

     Our  operating  results  in the viatical market have fluctuated in the past
and  may fluctuate significantly in the future depending on purchaser demand for
viatical  settlements.  Our  operating  results  in  the  senior life settlement
market  may fluctuate significantly depending on our ability to develop this new
market.  Because  of  these or other factors, our operating results may, in some
future  period, fall below market expectations.  In such event, the market price
of  our securities might fall.  Moreover, fluctuations in our viatical operating
results  may  also  result  in volatility in the market price of our securities.

Our  Success  Depends  on Maintaining Relationships Within Our Referral Networks

     In  the  viatical market, we rely primarily upon brokers to refer potential
viators and life settlors to us and upon financial planners, known as licensees,
to refer viatical and life settlement purchasers to us.  These relationships are
essential  to  our  operations  and  we  must maintain these relationships to be
successful.  We  do  not have fixed contractual arrangements with the brokers or
financial  planners  and  they are free to do business with our competitors.  In
addition,  the  pool  of  viatical  brokers  and referring financial planners is
relatively small, which can increase our reliance on our existing relationships.
During the past fiscal year, we relied on two brokers which presented 57% of the
policies  that  were  purchased through us.  This percentage of presentations is
down  from  68% last year by the same two brokers last year.  The loss of either
of  these  brokers could have a material effect on our financial operations.  We
have  attempted to ameliorate this risk by increasing our advertising and market
presence  in  order  to attract viators and life settlors to us directly. During
the  last fiscal year, 25% of all policies closed were presented to us directly.
This  amount  was more than the total amount of policies presented by our second
most active broker. However, many viators and life settlors are more comfortable
having  their policies presented through brokers, and the extent to which we may
be  able to attract viators and life settlors directly is unknown. As we develop
our  own  network  of  insurance  and financial planning professionals, known as
producers,  to  refer  potential  sellers  to  us, we expect referrals from this
source  to  grow.  As  with  brokers,  our  ability  to build and maintain these
relationships  will  depend upon our closing rates and the level of compensation
we  pay  to  the referring professional.  The compensation paid to the referring
professional  will  affect the offer price to the seller and the compensation we
receive.  We  must  balance  these interests successfully to build our referring
network  and  attain  greater  profitability.

Our  Success  in  the Senior Life Settlement Market Will Depend on Institutional
Sources  of  Capital

     Since  1997, we have expanded our business plans to include the senior life
market  by  soliciting  senior  life  sellers,  creating  a senior life referral
network,  and  establishing  a  division dedicated exclusively to attracting and
interacting  with  large  financial  institutions.  Although  we  have now begun


                                       10
<PAGE>

purchasing  policies  through this mechanism, our operating history in this area
to  date  is  very  limited.

     In addition to our ordinary purchasing structure for institutional clients,
we  continue  to  work  to  develop a capital markets vehicle to accommodate the
financing  of life settlements. The capital markets vehicle would likely involve
assembling  a  pool of life settlements that would securitize bonds sold into an
institutional  market.  Our  approach  depends substantially upon our ability to
develop  a  suitable  purchasing platform and secure one or more underwriters to
market  the  bonds and the development of an institutional market for the bonds.
While  we have conducted extensive discussions with several investment firms and
bond  rating  agencies,  we  have not assembled a pool of settlements and do not
have  a  firm commitment for a bond offering. Other parties in our industry have
completed  a  bond  offering securitized by life settlements, and we believe the
success of that offering may make it easier for us to complete a similar type of
offering.  While  we  believe  life settlements are well suited for this use and
have devoted substantial resources to pursuit of this approach, we cannot assure
you  that  an  underwriter  will commit to the bond issue or that the bond issue
will  create  sufficient  institutional  interest.

We  Must  Develop  Our  Life  Settlement  Referral  Network

     An  impediment  to our expansion in the life settlement market could be the
difficulty  in  identifying  a large volume of potential sellers.  These sellers
are  typically  affluent  persons  over  the  age  of  70  and not terminally or
chronically ill.  The target market is relatively narrow and advertising methods
such  as  direct  mailings  or  print  media  advertising  are  not likely to be
cost-effective.  We  believe  the  best  way  to  reach this market is generally
through  life  insurance  professionals   and,   to  a  lesser  extent,  through
professionals  engaged  in  estate planning, such as attorneys, accountants, and
financial  planners.  Settlement  brokers  will  also  reach  this  market.  Our
business  plan  utilizes  both insurance professionals and brokers as sources of
policies,  as well as the development of a life settlement referral network.  We
intend  to  rapidly  expand  our referring network of insurance professionals to
educate  potential  life  settlors on the options presented by life settlements.
We are actively working to expand our network through direct solicitation, calls
to  managing  general  insurance  agents,  and  by word-of-mouth contacts.  To a
lesser  extent,  we  will  also  use  advertising  in  financial  planning trade
publications  and  our  Internet website.  This is a new market and building our
referral  network  will depend on our ability to educate insurance professionals
about  the  benefits  of senior life settlements to potential sellers and to the
professionals  themselves.  While  we  believe  we  have  been  successful  in
publicizing  the benefits of viatical settlements, we cannot assure you that our
past  successes  will  carry over into this new market.  Our business, financial
condition  and  results  of operations could be materially adversely affected to
the  extent  we  fail  to  expand  the  referral  network.

We  Depend  on  Growth  in  both  the  Viatical  and  Life  Settlement  Market

     We believe the viatical market has demonstrated sustainable growth and will
continue  to  provide  a  stable  base  for our operations.  Large-scale growth,
however,  will  likely depend on growth in the life settlement market.  The life
settlement  market is new and its growth uncertain.  The life market may fail to
grow  due  to  a  variety  of  factors,  including:

     -    the  inability  to  locate  sufficient  numbers  of  life  settlors;

     -    the  inability  to  convince potential sellers of the benefits of life
          settlements;

     -    the  inability  to  attract  institutional  purchasers;

     -    competition  from  other  life  settlement  companies;


                                       11
<PAGE>

     -  the  occurrence  of  illegal  or abusive business practices resulting in
negative  publicity  about  the  market;  and

     -  the  adoption  of  overly  burdensome  governmental  regulation.

     In  addition,  the  life  settlement  market may evolve in ways we have not
anticipated  and  we  may  be  unable  to  respond in a timely or cost-effective
manner.  If  the  life  settlement  market  fails  to  grow, or fails to grow as
quickly as we have anticipated, our business, financial condition and results of
operations  would  be  materially  adversely affected as it relates to our large
scale  growth.

Our  Purchasers  Depend on Our Abilities to Predict Life Expectancies; If We Are
Not  Accurate,  We  Will  Lose  Purchasers;  We  Must  Purchase In Large Numbers

     A  purchaser's investment return from a viatical or life settlement depends
primarily  on  the  demise  of  the  insured.  We price settlements based on the
anticipated  life  expectancy  of  an  insured.  For  viatical settlements, life
expectancies are estimated based on a medical analysis of the insured.  For life
settlements,  life  expectancies  are  estimated from medical and actuarial data
based  on the historical experiences of similarly situated persons.  The data is
necessarily  based  on averages involving mortality and morbidity statistics and
the  laws  of large numbers.  It is impossible to predict any one insured's life
expectancy  exactly.  To  mitigate  the risk that an insured will outlive his or
her  predicted  life  expectancy, viatical settlement purchasers must be able to
bear a non-liquid investment for an indeterminate period of time.  Additionally,
institutional purchasers of life settlements must have the potential to buy such
policies  in  large  numbers  in  order  to  mitigate  risk.

     If  we underestimate the average life expectancies, our purchasers will not
realize the returns they seek and will invest their funds elsewhere. Our ability
to  accurately  predict  life  expectancies  is affected by a number of factors,
including:

     -    the  accuracy  of   our   life  expectancy   estimations,  which  must
          sufficiently  account  for factors including an insured's age, medical
          condition,  life  habits  (such  as smoking), and geographic location;

     -    our  ability  to anticipate and adjust for trends, such as advances in
          medical  treatments,  that  affect  life  expectancy  data;  and

     -    our  ability  to balance competing interests when pricing settlements,
          such  as the amounts paid to viators or life settlors, the acquisition
          costs  paid  by purchasers, and the compensation paid to ourselves and
          our  referral  networks.

     To  foster  the  integrity of our pricing systems, we use both in-house and
outside  experts,  including  a medical doctor and published actuarial data.  We
cannot  assure  you  that, despite our experience in settlement pricing, we will
not  err  by  underestimating  average life expectancies.  If we do so, we could
lose  purchasers and the loss of purchasers could have a material adverse effect
on  our  business,  financial  condition,  and  results  of  operations.

Government  Regulation  Could  Negatively  Impact  Our  Business

     We  are  licensed  in  the State of Texas as a viatical and life settlement
company.  The  Texas licensing laws and regulations are based in part on a model
law  and  regulations  promulgated  by  the  National  Association  of Insurance
Commissioners.  At  least  35 other states have now adopted some version of this
model  law or another form of regulation governing viatical settlement companies
in  some  way.  These laws generally require the licensing of viatical providers
and  brokers,  require the filing and approval of viatical settlement agreements
and  disclosure statements, and describe the content of disclosures that must be
made  to potential viators, describe various periodic reporting requirements for


                                       12
<PAGE>

viatical  settlement companies and prohibit certain business practices deemed to
be  abusive.

The  Federal  Securities  and  Exchange  Commission and certain states have also
attempted  to regulate the industry through the application of federal and state
securities  laws.  In  a  suit  filed  against  us,  the SEC's attempts to apply
federal  securities  laws  were  rebuffed  by  the U.S. Court of Appeals for the
District of Columbia, which ruled that our transactions are not securities under
the federal securities laws.  Based on this ruling, the SEC has discontinued any
further  attempts  to  apply  the  federal  securities  laws to viatical or life
settlements  transacted  by  us.  The  Court  of  Appeals  decision was based on
federal law and, while persuasive authority, is not binding upon the states.  At
least  20  states  have  either amended their state statutes to include viatical
settlements  in  the definition of a "security" or indicated that they may apply
their  securities  laws  to  include  viatical  settlements.  In  addition, both
federal  and  state  securities  laws  provide  private  remedies,  which permit
individuals  to  sue  under such laws if they can establish that the settlements
are  securities.  To  date,  we  have  encountered only one such action.  To our
knowledge,  no  state  or  private  individual  has  yet  attempted to apply its
securities laws to senior life settlements, but such application is possible and
could  occur  in  the  future.  [See  Item  3.  Legal  Proceedings.]

     While  we  welcome  reasonable  regulation  of the viatical and senior life
markets and believe that such regulation will benefit these markets, attempts to
regulate  these  markets  through  application of their securities laws - either
through  actions by state agencies or private individuals - may adversely affect
the  markets.  We  cannot  assure  you  that  we  will  not encounter regulatory
difficulties  in  the future, some of which could have a material adverse effect
on  our  business.  In addition, government regulation could affect our referral
networks  or  settlement purchasers, which could in turn have a material adverse
effect  on  our  business.

Our  Chairman  and  Chief  Executive Officer Beneficially Owns 54% of Our Common
Stock  and,  as  a  Result,  Can Exercise Significant Influence over Our Company

     Mr.  Brian  D.  Pardo, our Chairman and Chief Executive Officer, is defined
under SEC regulations as the beneficial owner of approximately 54% of our common
stock and exercises voting power by proxy from The Pardo Family Trust over 56.9%
of  the  common  stock  (since  we  cannot  vote  the 236,615 shares held in our
treasury).  He  will  be  able to control most matters requiring approval by our
shareholders,  including  the  election of directors and approval of significant
corporate  transactions.  This  concentration  of  ownership  may  also have the
effect  of delaying or preventing a change in control of Life Partners, which in
turn  could  have  a  material  adverse effect on the market price of our common
stock or prevent our shareholders from realizing a premium over the market price
for  their  shares  of  common  stock.

Our  Stock  Is  Thinly  Traded  and  the  Stock  Price  May  Be  Volatile

     As  we  announced  earlier this year, our common stock is now traded on the
Nasdaq  Small  Cap  market.  Unlike the OTC Bulletin Board, the Nasdaq Small Cap
market  requires numerous qualitative standards such as minimum price at initial
listing,  minimum  trading  price  for a 30-day period and adherence to numerous
corporate  governance  requirements  such  as  an  independent  audit committee.
Although  our share price and average daily volume have increased since we began
trading on the Nasdaq, our stock is still not widely traded and our share prices
may  be  volatile  due  to  actual  or  anticipated  variations in our quarterly
operating  results, positive or negative developments concerning our business or
about our industry or the general economy.  We cannot assure you that the market
for our shares will be sufficient to permit you to sell our shares when you want
at  the  prices you want.  However, by qualifying for the trading on the Nasdaq,
we  have  improved  our  visibility  and enlarged our market presence increasing
shareholder  liquidity  in our stock and making our stock price less susceptible


                                       13
<PAGE>

to volatile movements on low trading volume.  Our share price during the 90 days
ended  May  17,  2004,  has  averaged  about $6.14 per share, giving us a market
capitalization  of  approximately $58 million.  Our total share volume for April
2004  was  approximately  91,500  shares.

Item  2.  Description  of  Property

     Our  corporate  offices  are located at 204 Woodhew in Waco, Texas.  We own
1.068  acres  at  this  location and our offices occupy the entire 12,012 square
foot  office  building,  which  was  built  on  the  lot  in  1986.

Item  3.  Legal  Proceedings

On  Sept.  20,  2001,  we  received  a notice of deficiency from the IRS for the
fiscal years ended September 30, 1993, 1994 and 1995 in the amount of $1,755,624
in  federal  income  tax plus penalties of $351,124 and an unspecified amount of
interest.  On November 30, 2003, we settled the dispute with the IRS by agreeing
to  pay  total  additional  tax  of  $377,995,  for  all years in dispute and no
penalties.  We  paid  this amount on April 27, 2004, and have directed our legal
counsel  to  file  a request for abatement of interest on the tax.  Abatement of
interest  is in the discretion of the IRS, with an opportunity for review by the
U.S.  Tax Court. If an interest abatement is not granted to our satisfaction, we
intend  to  have  the  issue  judicially  reviewed.

     We  are  also  subject  to  legal  proceedings  in  the  ordinary course of
business,  none  of  which,  either individually or collectively, we believe are
material  to  our  business  operations,  financial  condition,  or  results  of
operations.

Item  4.  Submission  of  Matters  to  a  Vote  of  Security  Holders

     No  matter  was  submitted  during  the  fourth  quarter of the fiscal year
covered  by  this  Annual  Report  to  a  vote  of  our  security  holders.

                                    PART II

Item  5.  Market  for  Our  Common  Stock  and  Related  Shareholder  Matters

     Market  Information.  On  May  17,  2004,  there  were  approximately  131
shareholders  of  record  of  our Common Stock. Most of our common stock is held
beneficially  by  broker/dealers.  We  believe  that there are approximately 483
beneficial  owners of shares of our common stock who hold in street name through
brokers.

     The  following  table  sets  forth  the high and low closing bid prices per
share  of  our  common  stock for each full quarterly period during the two most
recent  fiscal  years,  as reported by the Nasdaq OTC Bulletin Board. Bid prices
for  the  Nasdaq  OTC Bulletin Board reflect inter-dealer prices, do not include
retail  mark-ups,  mark-downs  and  commissions,  and do not necessarily reflect
actual  transactions.


                                       14
<PAGE>

<TABLE>
<CAPTION>
                                                                     Cash
                                               High      Low       Dividends
                                               ----      ---       ---------
Year  Ended  2/28/03
<S>                                           <C>       <C>           <C>
     First  Quarter                           $8.00     $4.00         $.025
     Second Quarter                           $4.60     $1.80         $.025
     Third Quarter                            $3.00     $1.65         $.035
     Fourth Quarter                           $3.40     $2.25         $.025

Year  Ended  2/29/04
     First Quarter                            $3.90     $2.40         $.03
     Second Quarter                           $5.60     $3.00         $.03
     Third Quarter                            $6.50     $3.85         $.04
     Fourth Quarter                           $7.80     $5.28         $.04
</TABLE>

     On  May  14,  2004, the last reported sale price of our common stock on the
Nasdaq  was  $5.60  per  share.

     Dividends.  On  February  8,  2003,  the  Board  of  Directors  authorized
management to declare a four cent per share cash dividend per quarter if, in the
opinion  of  management,  such  a declaration will not adversely affect our cash
position. The Board further authorized management to declare, in addition to the
ordinary four cent per share cash dividend, an additional special divided of one
cent per share "Christmas Bonus" dividend for the third quarter for shareholders
of  record  as  of  November  30,  2003.

     Stock  Repurchases.  We  had  no stock repurchases during the fourth fiscal
quarter.

Item  6.  Management's  Discussion  and  Analysis

     Special  Note:  Certain  statements  set  forth  below  under  this caption
constitute  "forward-looking  statements"  within the meaning of the Reform Act.
See  "Special  Note Regarding Forward-Looking Statements" for additional factors
relating  to  such  statements.

     The  following  discussion  and analysis should be read in conjunction with
our  Consolidated  Financial Statements and Notes thereto appearing elsewhere in
this  Report.

     The  following  discussion  is  intended  to assist in understanding of our
financial  position  as  of  February 29, 2004 and results of operations for the
year  ended  February  29, 2004.  The financial statements and notes included in
this  report  contain  additional  information  and  should  be  referred  to in
conjunction  with  this  discussion.


                                       15
<PAGE>

Critical  Accounting  Estimates  and  Assumptions

     We  must  make  estimates  of  the  collect  ability  of accounts and notes
receivable  and  premium  advances.

     We  must evaluate property and equipment for impairment whenever indicators
of  impairment  exist.  Accounting  standards  require  that  if  an  impairment
indicator is present, we must assess whether the carrying amount of the asset is
unrecoverable  by estimating the sum of the future cash flows expected to result
form  the  asset,  undiscounted  and  without  interest charges. If the carrying
amount  is  less  than  the  recoverable  amount,  an  impairment charge must be
recognized,  based  on  the  fair  value  of  the  asset.

     We  must  evaluate the useful lives of our property and equipment to assure
that  an  adequate  amount  of  depreciation  is  being  charged  to operations.

     We  must  estimate  the future liability related to underwriting losses and
settlements  of  other  pending  litigation.

     We  are  required  to  estimate  our  income  taxes.  This process involves
estimating  our   current  tax  exposure   together  with  assessing   temporary
differences  resulting  from differing treatment of items for tax and accounting
purposes.  These  differences  result in deferred tax assets and liabilities. We
must  then  assess the likelihood that our deferred tax assets will be recovered
from  future  taxable income, and, to the extent we believe that recovery is not
likely,  we  must  establish a valuation allowance. To the extent we establish a
valuation  allowance  or  increase this allowance in a period, we must include a
tax  provision or reduce our tax benefit in the statements of operations. We use
our  judgment  to  determine our provision or benefit for income taxes, deferred
tax  assets and liabilities and any valuation allowance recorded against our net
deferred  tax  assets.

     We  cannot  predict  what future laws and  regulations might be passed that
could have a material effect on our results of operations.  We assess the impact
of significant changes in laws and regulations on a regular basis and update the
assumptions  and estimates used to prepare our financial statements when we deem
it  necessary.

     We  have  determined  the significant  principles by considering accounting
policies  that  involve the most complex or subjective decisions or assessments.

     We  record income at such time as the legally binding commitments have been
made  on  the  part  of  the  purchaser  and  the  insured.

     We  have not made any material changes to our critical accounting estimates
or  assumptions or the judgments affecting the application of those estimates or
assumptions.

New  Accounting  Pronouncements

     In  August  2001, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 143, Accounting for Obligations Associated
with the Retirement of Long-Lived Assets (SFAS 143). In April and June 2002, The
Financial  Accounting  Standards  Board issued Standard No. 145, Reporting Gains
and  Losses  from  Extinguishment  of  Debt  (SFAS  145),  and Standard No. 146,
Accounting  for Costs Associated with Exit or Disposal Activities (SFAS 146). In
December 2002, the Financial Accounting Standards Board issued Standard No. 148,
Accounting  for Stock-Based Compensation - Transition and Disclosure (SFAS 148).


                                       16
<PAGE>

     SFAS  143  establishes  accounting  standards   for   the  recognition  and
measurement  of  an  asset  retirement  obligation  and  its   associated  asset
retirement  cost.  It  also  provides  accounting guidance for legal obligations
associated  with  the  retirement  of  tangible  long-lived  assets. SFAS 143 is
effective  in  fiscal  years  beginning after June 15, 2002, with early adoption
permitted.  The  provisions  of  SFAS  143  do not have a material impact on our
consolidated  results of operations and financial position.  We adopted SFAS 143
effective  for the fiscal year ended February 28, 2003.

     SFAS  145  rescinds No.4, Reporting Gains and Losses from Extinguishment of
Debt,  SFAS  No. 44, Accounting for Intangible Assets of Motor Carriers and SFAS
No.  64, Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements. SFAS
145  amends  SFAS  No.  13, Accounting for Leases, to eliminate an inconsistency
between  the  required  accounting  for sale-leaseback transactions. SFAS 145 is
effective  in  fiscal  years  beginning  after May 15, 2002, with early adoption
permitted.  The  provisions  of  SFAS  145  do not have a material impact on our
consolidated  results  of operations and financial position. We adopted SFAS 145
effective  for the fiscal year ended February 28, 2003.

     SFAS  146, Accounting for Costs Associated with Exit or Disposal Activities
addresses  the  accounting  and  reporting  for  costs  associated  with exit or
disposal  activities.  SFAS  146 requires that a liability for a cost associated
with  an exit or disposal activity be recognized when the liability is incurred.
Previously,  under  Emerging  Issues Task Force (ETIF) Issue No. 94-3, Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit an
Activity  (including  Certain Costs Insured in a Restructuring), a liability for
an  exit  cost  was  recognized at the date of an entity's commitment to an exit
plan.  Under  SFAS  146,  an  entity's commitment to a plan, by itself, does not
create  a present obligation to others that meets the definition of a liability.
Therefore,  SFAS 146 eliminates the definition of exit costs in Issue 94-3. SFAS
146 also establishes that fair value is the objective for initial measurement of
the  liability.  The  provisions  of SFAS 146 are effective for exit or disposal
activities  that  are  initiated  after  December  31, 2002, with early adoption
permitted.  The  provisions  of  SFAS  146  do not have a material impact on our
consolidated  results  of operations and financial position. We adopted SFAS 146
effective  for the fiscal year ended February 28, 2003.

     SFAS  148,  Accounting  for   Stock-Based  Compensation  -  Transition  and
Disclosure,  amends No. 123, Accounting for Stock-Based Compensation, to provide
alternative methods of transition for a voluntary change to the fair value based
method  of  accounting  for stock-based employee compensation. In addition, SFAS
148  amends  the  disclosure  requirements  of SFAS No. 123 to require prominent
disclosures  in both annual and interim financial statements about the method of
accounting  for  stock-based  employee compensation and the effect of the method
used  in  reported  financial  results.  SFAS  148,  paragraphs 2(a) - 2(e), are
effective  for  financial  statements for fiscal years ending after December 15,
2002. SFAS 148, paragraph 2(f), and the amendment to APB Opinion No. 28, Interim
Financial  Reporting,  shall  be  effective  for  financial  reports  containing
condensed  financial statements for interim periods beginning after December 15,
2002.  Earlier  adoption  is  permitted.

     We  adopted  the disclosure provisions of SFAS 148 effective for the fiscal
year  ended February 28, 2003. As permitted under SFAS 148, we continue to apply
the recognition provisions of APB Opinion No. 25, Accounting for Stock Issued to
Employees,  in  determining  our  compensation  expense.

Life  Partners

     We  are  the  oldest  and  one  of the largest viatical and life settlement
companies  in  the  United States.  Our revenues are primarily derived from fees
associated  with  facilitating  viatical  settlements,  and  to a lesser extent,
senior  life  settlements.


                                       17
<PAGE>

Comparison  of  Years  Ended  February  29,  2004  and  February  28,  2003

     We  had  net  income  of $2,478,431 for the year ended February 29, 2004 as
compared  to net income of $1,879,144 for the year ended February 28, 2003. This
increase in net income is attributable primarily to the following factors: (1) a
28%  increase  revenues  offset  in  part by (2) a 21% increase in brokerage and
referral fees, (3) a 23% increase in general and administrative expenses and (4)
a  significant  increase in  interest expense incurred as a result of settlement
of  a  tax  dispute  with  the  Internal  Revenue  Service.

     Revenues - Revenues increased by $3,418,392 or 28% from $12,178,433 in 2003
to  $15,596,825  in  2004.  This increase was due primarily to a 25% increase in
the  average  revenue  per  settlement  from $37,357 in 2003 to $46,837 in 2004.

     The number of settlements we transacted this year increased by 2% over last
year.  However,  despite this modest increase in the number of transactions, our
revenues  and net income increased substantially. This is because the demand for
our  services  as well as less competition, especially for viatical settlements,
has supported a pricing structure which has enabled us to increase our operating
margins.  This  has  allowed  us  to generate the increased net income reported.

     We  believe  the increasing demand for our services results from investment
trends  toward  diversifying  investment  portfolios  and  avoiding economically
sensitive  investments.  As  the  oldest  and  one  of  the largest providers of
viatical  and  life  settlements,  we benefit from these trends in the investing
community.  Although  demand  for  our  services emanates from both domestic and
international purchasers, we noted a decrease in revenue attributable to foreign
clients.  This  demand gap was filled by domestic purchasers and we sustained no
material  financial impact from this decrease. Approximately 64% of our business
for  the  year  was  from  domestic  purchasers while approximately 36% was from
foreign  purchasers  during  fiscal  2004.  In  fiscal  2003, this ratio was 45%
domestic  business  and  55%  international.  We  believe  domestic  demand will
continue  to  grow,  especially  with  continued  economic uncertainty and stock
market  volatility.  While  interest  from the Pacific Rim and South America has
waned  from  our  prior  fiscal  year, we have noted a substantial interest from
purchasers  in  Western  Europe  and expect demand from this region to be strong
over  the next year. We believe this increase in interest from Western Europe is
due to the strong return potential of life settlements, favorable tax treatment,
and  a  strong  Euro  to  US  dollar  ratio.

     Brokerage  and Referral Fees - Brokerage and referral fees increased 21% or
$1,266,426  from $6,112,840 in 2003 to $7,379,266 in 2004.  This increase is due
primarily  to  a 28% increase in revenues. Brokerage and referral fees generally
increase  or decrease with revenues and the volume of transactions, although the
exact ratio may vary according to a number of factors.  Brokers may adjust their
fees with the individual viators and life settlors whom they represent.  In some
instances,  several  brokers  may compete for representation of the same seller,
which  will  result  in  lower broker fees. Referral fees also vary depending on
factors  such as varying contractual obligations, market demand for a particular
kind  of  policy  or  life  expectancy  category,  individual agreements between
clients  and their referring financial planners.  No broker fees are paid when a
viator  or  life settlor is not represented by a broker and presents a policy to
us  directly.

     Expenses  -  General  and  administrative  expenses  increased  by  23%  or
$1,043,152  from  $3,377,776  in  2003  to  $4,420,928 in 2004.  The increase in
general  and  administrative  expenses  is  due  primarily  to (1) substantially
increased  advertising costs - from $91,625 in fiscal 2003 to $509,377 in fiscal
2004  -  expended  in  our efforts to attract more direct settlors and potential
purchasers, and (2) increases in hourly employee compensation - from $602,717 in
fiscal 2003 to $791,650 in fiscal 2004 - much of which was due to added overtime
compensation.  Interest  expense  increased  by  $332,451  primarily  due to the
accrual  of  interest  on the IRS settlement.  This accrual amount is based upon


                                       18
<PAGE>

the amount charged by the IRS and may be reduced if our request for an abatement
of  interest  is  successful.  There  were  no  material changes in depreciation
expense  and  other  income.

     Income  Taxes  -  Income tax expense increased by $290,760 from $650,500 in
2003  to  $941,260  in 2004. Current income tax expense increased by $906,760 or
139%  from  $650,000  in  2003  to  $1,557,260 in 2004.  The increase in current
income  tax  expense  was  due  in  part to the inclusion of $377,995 related to
settlement  of an IRS claim relating to prior years combined with an increase in
current  year  taxable income.  As a result of this settlement with the Internal
Revenue  Service  and  the  continued  profitable  operations  of  the  Company,
management  determined that an allowance was no longer required on the Company's
net  deferred  tax  asset. This resulted in the recognition of a deferred income
tax  benefit  of  $616,000  during  2004.

Liquidity  and  Capital  Resources

     Operating  Activities - Net cash flows provided by operating activities for
the  year  ended  February 29, 2004 were $1,427,387 compared with net cash flows
provided  by  operating activities of $2,691,143 for the year ended February 28,
2003.  This  decrease  in  cash flows from operating activities was attributable
primarily  to  net  income  of  $2,478,431,  reduced by a $1,636,591 increase in
accounts  receivable.

     During  the  year,  we  paid  dividends  of  $1,324,865 and paid $11,528 to
purchase  3,000  shares  of  our  common  stock.

     Our  strategy  is  to  increase  cash  flows  generated  from operations by
increasing  revenues  while controlling brokerage and general and administrative
expenses.  We  believe  that domestic and international demand for both viatical
and  life  settlements will continue to grow during the next year, especially as
the  prospects  for  economic  conditions  remain  uncertain. In response to the
projected  demand  for  qualified  viatical and life settlement policies, we are
increasing  our  advertising  and  educational awareness to potential sellers of
policies and will continue to expand our marketing efforts to purchasers of life
settlements.

     At  February  29,  2004,  we had working capital of $3,647,062.  We believe
future  viatical and life settlement operations will generate sufficient profits
and  cash  flows to meet our anticipated working capital needs. Services related
to  life settlements are currently marketed and performed in a manner similar to
viatical  settlements,  although primarily to institutional purchasers.  We will
continue  to  explore pooled securitization arrangements for life settlements as
well,  but do not expect any material adverse financial impact on our operations
if  a  securitization  fails  to  develop.



Off  Balance  Sheet  Arrangements

     We  have  advanced  the  policy premiums to maintain certain older viatical
contracts.  The  contracts, all of which were sold before 1999, allegedly lacked
sufficient  disclosure  about  the  purchaser's  obligation  to  pay premiums to
maintain  an  acquired  policy.  While  we  have  steadfastly  denied  any legal
liability,  we  have  advanced  premiums as an accommodation to some purchasers.
Reimbursements  for  these  premiums come from either the purchasers or from the
distribution  of  such  purchaser's  proceeds  paid when the viator dies. Policy
advances  have  been  recorded  as  an  expense  at  the time they are made with
collections being treated as a reduction in this expense. During fiscal 2004 and


                                       19
<PAGE>

2003, we made premium advances of $459,789 and  $266,856, respectively, and were
reimbursed  $106,307  and  $61,227,  respectively. We are unable to estimate the
amount  of  any  future  advances  we  may  elect  to  make  or  the  amount  of
reimbursements  we  are  likely  to  receive.

Contractual  Obligations  and  Commitments

The  following  table  reflects  our  outstanding  contractual  obligations  and
commitments  as  of  February  29,  2004:

<TABLE>
<CAPTION>
                                            Due in less     Due in 1 to    Due in 4 to   Due after
Contractual  Obligations     Total          than 1 year     3 years        5  years      5  years
------------------------     -----          -----------     -----------    -----------   ---------
<S>                         <C>               <C>            <C>            <C>           <C>
Long  term  debt            $548,647          $46,696         $99,395       $111,076      $291,480

Operating  leases            135,695           36,675          73,350         25,670             -
                            --------          -------        --------       --------      --------

     Total  obligations     $684,342          $83,371        $172,745       $136,746      $291,480
                            ========          =======        ========       ========      ========
</TABLE>

Item  7.  Financial  Statements

     Our audited financial statements, together with the report of auditors, are
included  in  the  report  after  the  signature  page.

Item  8.  Changes  in  and  Disagreements  with  Accountants  on  Accounting and
Financial  Disclosure

     None.

Item  8A.  Controls  and  Procedures

     As required by Rule 13a-15 under the Securities Exchange Act of 1934, as of
the  filing  date  of  this  report,  we  carried   out  an  evaluation  of  the
effectiveness  of  the  design  and  operation  of  our  disclosure controls and
procedures.  This  evaluation was carried out under the supervision and with the
participation  of  our  principal  executive officer and our principal financial
officer,  who  concluded  that  our  disclosure  controls  and   procedures  are
effective. There have been no significant changes in our internal controls or in
other  factors, which could significantly affect internal controls subsequent to
the  date  we  carried  out  our  evaluation.

     Disclosure  controls  and procedures are controls and other procedures that
are  designed to ensure that information required to be disclosed in our reports
filed  or  submitted  under  the Securities Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the Securities and
Exchange  Commission's  rules  and  forms.  Disclosure  controls  and procedures
include,  without  limitation,  controls  and procedures designed to ensure that
information required to be disclosed in our reports filed under the Exchange Act
is accumulated and communicated to management, including our principal executive
officer  and  our  principal  financial officer, as appropriate, to allow timely
decisions  regarding  required  disclosure.


                                       20
<PAGE>

                                    PART III

Item  9.  Directors  and  Executive  Officers

     The information required in response to this Item is incorporated herein by
reference  to  our  proxy statement to be filed with the Securities and Exchange
Commission  pursuant to Regulation 14A, not later than 120 days after the end of
the  fiscal  year  covered  by  this  report.

Item  10.  Executive  Compensation

     The information required in response to this Item is incorporated herein by
reference  to  our  proxy statement to be filed with the Securities and Exchange
Commission  pursuant to Regulation 14A, not later than 120 days after the end of
the  fiscal  year  covered  by  this  report.

Item  11.  Security  Ownership  of  Certain  Beneficial  Owners  and Management

     The information required in response to this Item is incorporated herein by
reference  to  our  proxy statement to be filed with the Securities and Exchange
Commission  pursuant to Regulation 14A, not later than 120 days after the end of
the  fiscal  year  covered  by  this  report.

Item  12.  Certain  Relationships  and  Related  Transactions

     The information required in response to this Item is incorporated herein by
reference  to  our  proxy statement to be filed with the Securities and Exchange
Commission  pursuant to Regulation 14A, not later than 120 days after the end of
the  fiscal  year  covered  by  this  report.

Item  13.  Exhibits  And  Reports  on  Form  8-K

(a)  Exhibits

            Number                               Description
            ------                               -----------

              3.2     Amended Articles  of  Incorporation,  dated  February  19,
                      2003  (1)
              3.2     Bylaws  (2)
              4.1     Form  of  stock  certificate  for  our  common  stock  (2)
             14       Code  of  Ethics  for  Directors  and  Executive  Officers
             21       Subsidiaries  of  the  Issuer
             31       Rule  13a-14(a)  Certifications
             32       Section  1350  Certification
----------------------------

     *    Denotes  a  management contract or compensatory plans or arrangements.
     (1)  This  exhibit  was filed with our Annual Report on Form 10-KSB for the
          year ended February 28, 2003, and is incorporated by reference herein.
     (2)  These  exhibits  were  filed with our Annual Report on Form 10-KSB for
          the  year  ended  February 29, 2000, and are incorporated by reference
          herein.

(b)  Reports  on  Form  8-K:


                                       21
<PAGE>

     We  filed  the  following  Form 8-K's during the quarter ended February 29,
2004:

          Date                              Covering
          ----                              --------
     Feb.  16,  2004     Press release  announcing payment of quarterly dividend
                         of $0.04 per  share  on  or  about  February  29,  2004
     Feb.  9,  2004      Press release announcing increase in quarterly dividend
                         rate to $0.04  per  share, plus $0.01 "Christmas Bonus"
                         dividend during 3rd quarter

Item  14.  Principal  Accountant  Fees  and  Services

     The information required in response to this Item is incorporated herein by
reference  to  our  proxy statement to be filed with the Securities and Exchange
Commission  pursuant to Regulation 14A, not later than 120 days after the end of
the  fiscal  year  covered  by  this  report.


























                                       22
<PAGE>

                                   SIGNATURES

     In  accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.


May  28,  2004                                   Life  Partners  Holdings,  Inc.



                                                 By:/s/  Brian  D.  Pardo
                                                    ----------------------------
                                                    Brian D. Pardo
                                                    President  and  Chief
                                                      Executive  Officer

     In  accordance  with the Exchange Act, this report has been signed below by
the  following  persons on behalf of the registrant and in the capacities and on
the  dates  indicated.

<TABLE>
<CAPTION>
          Name                       Title                             Date
          ----                       -----                             ----
<S>                              <C>                                <C>
/s/Brian  D.  Pardo              President, Principal Executive     May 28, 2004
-----------------------------
Brian  D.  Pardo                   Officer,  and  Director

/s/Nina  Piper                   Chef Financial Officer,            May  28,  2004
-----------------------------
Nina  Piper                        Treasurer

/s/R.  Scott  Peden              Secretary,  Director               May  28,  2004
-----------------------------
R.  Scott  Peden

/s/Tad  Ballantyne               Director                           May  28,  2004
-----------------------------
Tad  Ballantyne

/s/Jacqueline  Davis             Director                           May  28,  2004
-----------------------------
Jacqueline  Davis

/s/Fred  Dewald                  Director                           May  28,  2004
-----------------------------
Fred  Dewald
</TABLE>






                                       23
<PAGE>

                          LIFE PARTNERS HOLDINGS, INC.
                        CONSOLIDATED FINANCIAL STATEMENTS
                           FEBRUARY 29, 2004 and 2002





                                    Contents


Independent  Auditor's  Report                                              F-2

Audited  Consolidated  Financial  Statements:

     Consolidated  Balance  Sheets                                        F-3-4

     Consolidated  Statements  of  Operations                               F-5

     Consolidated  Statements  of  Shareholders'  Equity                    F-6

     Consolidated  Statements  of  Cash  Flows                              F-7

     Notes  to  the  Financial  Statements                               F-8-15




















                                      F-1
<PAGE>


                          Independent Auditors' Report



To  the  Board  of  Directors
Life  Partners  Holdings,  Inc.



We  have  audited  the  accompanying consolidated balance sheet of LIFE PARTNERS
HOLDINGS,  INC. as of February 29, 2004, and the related consolidated statements
of operations, shareholders' equity, and cash flows for the years ended February
29,  2004   and   February  28,  2003.   These  financial   statements  are  the
responsibility of the Company's management.  Our responsibility is to express an
opinion  on  these  financial  statements  based  on  our  audits.

We conducted our audits in accordance with auditing standards generally accepted
in  the  United  States  of  America.  Those  standards require that we plan and
perform  the  audits  to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test  basis,  evidence  supporting  the amounts and disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made  by  management,  as well as evaluating the overall
financial  statement  presentation.  We  believe  that  our  audits  provide  a
reasonable  basis  for  our  opinion.

In our opinion the financial statements referred to in the first paragraph above
present  fairly,  in  all  material  respects,  the  financial  position of Life
Partners  Holdings,  Inc.  as  of  February  29,  2004,  and  the results of its
operations and its cash flows for the years ended February 29, 2004 and February
28,  2003,  in  conformity  with accounting principles generally accepted in the
United  States  of  America.

MURRELL,  HALL,  MCINTOSH  &  CO.,  PLLP



Oklahoma  City,  Oklahoma

April  30,  2003







                                      F-2
<PAGE>

                          LIFE PARTNERS HOLDINGS, INC.
                           CONSOLIDATED BALANCE SHEET
                                FEBRUARY 29, 2004
                                  Page 1 of 2


                                     ASSETS
<TABLE>
<CAPTION>
CURRENT  ASSETS:
<S>                                                            <C>
     Cash                                                      $      3,174,157
     Investment in securities                                         1,905,795
     Accounts receivable - trade                                      1,978,294
     Accounts receivable - employees and others                          89,840
     Notes receivable                                                    40,390
     Prepaid  expenses                                                      970
                                                               ----------------

          Total current assets                                        7,189,446
                                                               ----------------

PROPERTY  AND  EQUIPMENT:
     Land and building                                                  871,430
     Machinery and equipment                                            269,966
     Transportation equipment                                           151,451
     Computer equipment                                                 131,352
                                                               ----------------

                                                                      1,424,199

     Accumulated depreciation                                          (309,503)
                                                               ----------------

                                                                      1,114,696
                                                               ----------------

OTHER  ASSETS:
     Premium advances, net of reserve for uncollectible
       of $917,924                                                            -
     Other                                                               98,201
     Deferred income taxes                                              616,000
                                                               ----------------

                                                                        714,201
                                                               ----------------

          Total Assets                                         $      9,018,343
                                                               ================
</TABLE>




 See the accompanying summary of accounting policies and notes to the financial
                                  statements.

                                      F-3
<PAGE>

                          LIFE PARTNERS HOLDINGS, INC.
                           CONSOLIDATED BALANCE SHEET
                                FEBRUARY 29, 2004
                                  Page 2 of 2


                      LIABILITIES AND SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
CURRENT  LIABILITIES:
<S>                                                            <C>
     Accounts payable                                          $      1,098,253
     Accrued liabilities - contingencies and other                    1,633,867
     Current portion of long term-debt                                   46,625
     Deferred revenue                                                   168,400
     Income taxes payable                                               595,239
                                                               ----------------

          Total current liabilities                                   3,542,384
                                                               ----------------

LONG-TERM DEBT, net of current portion shown above                      501,951
                                                               ----------------

SHAREHOLDERS'  EQUITY:
     Common stock, $0.01 par value 10,000,000 shares                     97,114
       authorized;  9,711,400  shares  issued  and  outstanding
     Additional paid-in capital                                      10,327,540
     Accumulated deficit                                             (4,948,719)
     Accumulated other comprehensive loss                               (23,496)
     Less: Notes receivable issued for common stock                    (478,431)
     Less: Treasury stock - 236,615                                           -
                                                               ----------------

          Total shareholders' equity                                  4,974,008
                                                               ----------------

          Total Liabilities and Shareholders' Equity           $      9,018,343
                                                               ================
</TABLE>



 See the accompanying summary of accounting policies and notes to the financial
                                  statements.


                                      F-4
<PAGE>

                          LIFE PARTNERS HOLDINGS, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 FOR THE YEARS ENDED FEBRUARY 29, 2004 AND 2003

<TABLE>
<CAPTION>
                                                      2004              2003
                                                      ----              ----
<S>                                            <C>               <C>
REVENUES                                       $   15,596,825    $   12,178,433

BROKERAGE AND REFERRAL  FEES                        7,379,266         6,112,840
                                               --------------    --------------

REVENUES, NET OF BROKERAGE FEES                     8,217,559         6,065,593
                                               --------------    --------------

OPERATING  AND  ADMINISTRATIVE  EXPENSES:
     General and administrative                     4,420,928         3,377,776
     Accrued contingency costs                         99,237           232,867
     Depreciation                                      85,244            62,917
                                               --------------    --------------
                                                    4,605,409         3,673,560
                                               --------------    --------------

INCOME  FROM  OPERATIONS                            3,612,150         2,392,033
                                               --------------    --------------

OTHER  INCOME  (EXPENSES):
     Interest and other income                        213,346           190,266
     Interest expense                                (385,106)          (52,655)
     Realized loss                                    (20,699)                -
                                               --------------    --------------
                                                     (192,459)          137,611
                                               --------------    --------------
INCOME BEFORE INCOME TAXES                          3,419,691         2,529,644
                                               --------------    --------------

INCOME  TAXES:
     Current  tax expense                           1,557,200           650,500
     Deferred tax benefit                            (616,000)                -
                                               --------------    --------------
                                                      941,260           650,500
                                               --------------    --------------

NET INCOME                                     $    2,478,431    $    1,879,144
                                               ==============    ==============

EARNINGS  PER  SHARE:
---------------------

     Basic                                     $         0.26    $         0.20
                                               ==============    ==============

     Diluted                                   $         0.26    $         0.20
                                               ==============    ==============

AVERAGE  COMMON  AND  COMMON
  EQUIVALENT SHARES OUTSTANDING                     9,456,748         9,474,785
                                               ==============    ==============
</TABLE>

 See the accompanying summary of accounting policies and notes to the financial
                                  statements.


                                      F-5
<PAGE>

                          LIFE PARTNERS HOLDINGS, INC.
                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                 FOR THE YEARS ENDED FEBRUARY 29, 2004 AND 2003


<TABLE>
<CAPTION>
                                 Common  Stock                                                         Treasury  Stock
                                 --------------                                                        ---------------
                                                                       Accumulated
                         Number     $0.01     Additional                  Other                   Number                 Total
                          of         par       Paid-In    Accumulated   Comprehen-     Note         of                Shareholders'
                        Shares      Value      Capital      Deficit     sive  Loss   Receivable   Shares     Amount      Equity
                       ----------  --------  -----------  ------------  ----------  -----------  -------  ----------  -------------
Balance,
<S>                    <C>         <C>       <C>          <C>           <C>         <C>          <C>      <C>         <C>
  February 28, 2002    10,000,000  $100,000  $11,254,600  $(6,878,060)  $       -   $(479,045)   370,324  $(337,775)  $ 3,659,720

Treasury stock
  purchased                     -         -            -            -           -           -    144,891   (632,723)     (632,723)

Payments on notes
  receivable                    -         -            -            -           -         614          -          -           614

Dividends declared              -         -            -   (1,103,369)          -           -          -          -    (1,103,369)

Treasury stock retired   (288,600)   (2,886)    (967,612)           -           -           -   (288,600)   970,498             -

Net  income  for
  the  year  ended
  February 28, 2003             -         -            -    1,879,144           -           -          -          -     1,879,144
                       ----------  --------  -----------  ------------  ----------  -----------  -------  ----------  -----------

Balance,
  February 28, 2003     9,711,400    97,114   10,286,988   (6,102,285)          -    (478,431)   226,615          -     3,803,386

Purchases of
  treasury stock                -         -            -            -           -           -     38,000    (11,528)      (11,528)

Options exercised               -         -       40,552            -           -           -    (28,000)    11,528        52,080

Other comprehensive
  loss                          -         -            -            -     (23,496)          -          -          -       (23,496)

Dividends declared              -         -            -   (1,324,865)          -           -          -          -    (1,324,865)

Net  income  for
  the  year  ended
  February 29, 2004             -         -            -    2,478,431           -           -          -          -     2,478,431
                       ----------  --------  -----------  ------------  ----------  -----------  -------  ----------  -----------

Balance,
  February 29, 2004     9,711,400  $ 97,114  $10,327,540  $(4,948,719)  $ (23,496)  $(478,431)    236,615  $      -   $ 4,974,008
                       ==========  ========  ===========  ===========   =========   =========    ========  ========   ===========
</TABLE>


            See the accompanying summary of accounting policies and
                       notes to the financial statements.





                                      F-6

<PAGE>

                          LIFE PARTNERS HOLDINGS, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED FEBRUARY 29, 2004 AND 2003

<TABLE>
<CAPTION>
                                                      2004              2003
                                                      ----              ----
CASH  FLOWS  FROM  OPERATING  ACTIVITIES:
<S>                                            <C>               <C>
     Net income                                $    2,478,431    $    1,879,144
     Adjustments  to  reconcile  net  income
     to  operating  activities-
          Depreciation                                 85,244            62,917
          Loss on disposal of property
            and equipment                               2,720             1,138
          Decrease (increase) in accounts
            receivable                             (1,636,591)         (406,228)
          Decrease (increase) in prepaid
            expenses                                    1,826           127,803
          Deferred tax benefit                       (616,000)                -
          (Increase) decrease in other assets         (12,156)          (77,036)
          Increase (decrease) in accounts
            payable                                   762,703           211,232
          Increase in accrued liabilities             256,221           377,273
          Increase (decrease) in income
            taxes payable                              94,739           500,500
          Increase in unearned revenue               10,250            14,400
                                               --------------    --------------
     Net cash provided by operating activities      1,427,387         2,691,143
                                               --------------    --------------

CASH  FLOWS  FROM  INVESTING  ACTIVITIES:
     Note receivable                                  (40,390)            4,603
     Investment in securities                      (1,929,292)                -
     Purchases of property and equipment             (206,872)         (216,974)
                                               --------------    --------------
     Net cash used in investing activities         (2,176,554)         (212,371)
                                               --------------    --------------

CASH  FLOWS  FROM  FINANCING  ACTIVITIES:
     Payments on note payable                         (35,226)          (25,109)
     Treasury stock purchased                         (11,528)         (632,723)
     Stock options exercised                           52,080                 -
     Dividends                                      (1,324,865)      (1,103,369)
                                               --------------    --------------
     Net cash provided by financing activities      (1,319,539)      (1,761,201)
                                               --------------    --------------

NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS                                    (2,068,706)         717,571
CASH AND CASH EQUIVALENTS, BEGINNING
  OF PERIOD                                          5,242,863        4,525,292
                                               --------------    --------------

CASH AND CASH EQUIVALENTS, END OF PERIOD       $     3,174,157    $   5,242,863
                                               ===============    =============

SUPPLEMENTAL  DISCLOSURES  OF  CASH
  FLOW  INFORMATION:

     Interest paid, net of capitalized amounts $        37,810    $      52,655
                                               ===============    =============

     Income taxes paid                         $     1,462,521    $     150,000
                                               ===============    =============
</TABLE>

NON-CASH TRANSACTIONS:
----------------------

     During June 2003, the Company refinanced the building mortgage of $572,270.



 See the accompanying summary of accounting policies and notes to the financial
                                  statements.


                                      F-7
<PAGE>

                          LIFE PARTNERS HOLDINGS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                FEBRUARY 29, 2004


(1)  DESCRIPTION  OF  BUSINESS

Life  Partners  Holdings, Inc. (the "Company") is a Texas corporation engaged in
facilitating  viatical  and life settlement transfers.  It is the parent company
of  Life  Partners,  Inc.  ("LPI"),  which  is the oldest and one of the largest
viatical  settlement  companies  in  the  United  States.  Viatical  and  life
settlements  involve  the  purchase of the life insurance policies of terminally
ill  persons (viatical settlements) or elderly persons (senior life settlements)
at  a  discount  to  their  face  value.

(2)  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES

The  following  is a summary of significant accounting policies followed by Life
Partners:

Certain  2003  amounts  have  been  reclassified  to  conform  to current period
presentation.  These reclassifications have no effect on previously reported net
income.

Cash  and  Cash  Equivalents  -  For purposes of the statement of cash flows, we
consider  all  short-term  debt  securities  purchased  with a maturity of three
months  or  less  to  be  cash  equivalents.  The average balance of our general
checking account balance is generally in excess of $100,000. The Federal Deposit
Insurance  Corporation  insures  all  bank  accounts  up to $100,000. Management
believes  its exposure to loss is minimal considering only the amounts in excess
of  $100,000  are at risk and the depository bank is a well established national
bank  and  one  of  the  nation's  largest  financial  institutions.

Premium  advances  -  The  Company  follows  the practice of fully reserving all
premium  advances at the time such advances are made.  When premium advances are
repaid,  the  repayments  are  offset  against  the premium expense.  During the
fiscal  years ended February 29, 2004 and February 28, 2003 the Company advanced
premiums  totaling $459,789 and $266,856 respectively and received repayments of
advances  of  $106,307  and  $  61,227  respectively.

Consolidation  -  The  consolidated financial statements include the accounts of
Life  Partners  and its wholly owned subsidiaries, as described in Note 1 above.
All  significant inter-company accounts and transactions have been eliminated in
consolidation.

Revenue Recognition - The Company records income at such time as legally binding
commitments  have  been made on the part of both the purchasers and the insured.

Investment  in  Life Insurance Policies - In accordance with Financial Standards
Board  Technical Bulletin 85-4 "Accounting for Purchases of Life Insurance", the
Company  reduces  its  investment  in  life  insurance  policies  to  their cash
surrender value with any differences between cost and cash surrender value being
charged  to expense. At February 29, 2004, the Company held investments in eight
life  insurance  policies  with face value amounts totaling $163,259, which have
been  reduced  to  the  carrying  value  of  $880.

Property  and  Equipment  - The Company's property and equipment are depreciated
over  their  useful  lives  using the straight-line method.  The useful lives of
property  and  equipment  for  purposes  of  computing  depreciation  are:


                                      F-8
<PAGE>
<TABLE>
<CAPTION>
<S>                                                <C>
               Building                                  30  years

               Machinery  and  equipment                  5  years

               Transportation  equipment           5  to  9  years
</TABLE>

Impairment  of  Long-lived  Assets - The Company accounts for the impairment and
disposition  of  long-lived  assets in accordance with SFAS No. 121, "Accounting
for  the  Impairment  of  Long-lived  Assets  to  be  Disposed of" (FAS 121). In
accordance with FAS 121, long-lived assets to be held are reviewed for events or
changes  in  circumstances,  which indicate that their carrying value may not be
recoverable.  As  of  February  29,  2004,  no  impairment  has  been indicated.

Income  Taxes  - Timing differences between the reporting of income and expenses
for  financial  and  income  tax reporting purposes are reported as deferred tax
assets, net of valuation allowances, or as deferred tax liabilities depending on
the cumulative effect of all timing differences. See Note 6 for further details.

Use  of  estimates  - The preparation of financial statements in conformity with
generally  accepted  accounting principles requires management to make estimates
and  assumptions  that  affect  the  amounts  reported and contingent assets and
liabilities disclosed in the financial statements and accompanying notes. Actual
results  inevitably will differ from those estimates and such differences may be
material  to  the  financial  statements.

Earnings  (Loss)  Per  Share  - Basic earnings (loss) per share computations are
calculated on the weighted-average of common shares and common share equivalents
outstanding during the year, reduced by the treasury stock. Common stock options
and  warrants  are  considered  to  be  common share equivalents and are used to
calculate  diluted  earnings per common and common share equivalents except when
they  are  anti-dilutive.

(3)  NEW  ACCOUNTING  PRONOUNCEMENTS

In  April of 2002, the Financial Accounting Standards Board issued SFAS No. 145,
"Recession  of  FASB Statements Non 4, 44, and 64, Amendment of FASB No. 13, and
Technical  Corrections.  SFAS  deals  with  reporting  gains  and  losses  for
extinguishment  of debt, accounting for intangible Assets of Motor Carriers, and
sales  and  leaseback  transactions.

In  June  of  2002, the Financial Accounting Standards Board issued SFAS No. 146
"Accounting  for  Costs  Associated  with  Exit  or  Disposal  Activities.  This
statement  requires  that  cost  associated with an exit or disposal activity be
recognized  only  when  the  liability  is  incurred.

In October of 2002, the Financial Accounting Standards Board issued SFAS No. 147
"Acquisition  of  Certain  Financial  Institutions.

In  December  of  2002, the Financial Accounting Standards Board issued SFAS No.
148  "Accounting  for Stock-Based Compensation- Transition and Disclosure.  This
statement  amends  SFAS  Non  123  "Accounting for Stock Based Compensation", to
provide  alternative  methods  of  transition for a voluntary change to the fair
value  based  method  of  accounting  for  stock-based  employee  compensation.

In  April  of 2003, the Financial Accounting Standards Board issued SFAS No. 149
"Amendment  of  Statement  133 on Derivative Instruments and Hedging Activities.
This  statement  amends  and  clarifies  financial  accounting and reporting for
derivative  instruments  and  for hedging actives Under FASB Non 133 "Accounting
for  Derivative  Instruments  and  Hedging  Activities.
..
In  May  of  2003,  the Financial Accounting Standards Board issued SFAS No. 150
"Accounting  for  Certain  Financial  Instruments  with  Characteristics of both


                                      F-9
<PAGE>

Liability  and  Equity.  This  standard  establishes standards for how an issuer
classifies  and  measures  certain financial instruments with characteristics of
both  liabilities  and  equity

Management  believes  adoption  of  these  new  statements  will  not  have  any
significant  effect  on  the  Company's  financial  condition  or  results  of
operations.

(4)  INVESTMENTS  IN  SECURITIES

The  Company's  securities  investments that are bought and held principally for
the  purpose  of  selling  them  in  the  near  term  are  classified as trading
securities.  Trading  securities are recorded at fair value on the balance sheet
in  current  assets, with the change in fair value during the period included in
earnings.

Securities  investments  that the Company has the positive intent and ability to
hold  to  maturity are classified as held-to-maturity securities and recorded at
amortized  cost  in  investments  and  other assets.  Securities investments not
classified  as  either  held-to-maturity or trading securities are classified as
available-for-sale  securities.  Available-for-sale  securities  are recorded at
fair value in investments and other assets on the balance sheet, with the change
in  fair  value during the period excluded from earnings and recorded net of tax
as  a  component  of  other  comprehensive  income.

The  cost  and estimated market value of the investment securities classified as
available-for-sale  as  of  February  29,  2004  are  as  follows:

<TABLE>
<CAPTION>
                                          Gross       Gross        Unrealize
                                       Unrealized   Unrealized     Estimated
                              Cost        Gains      (Losses)         Value
                          -----------  ----------   ----------   ------------
<S>                       <C>            <C>        <C>           <C>
MARKET  Income  funds     $ 1,591,791    $     -    $ (25,746)    $ 1,566,045
Corporate  stocks             337,500      2,250            -         339,750
                          -----------    -------    ---------     -----------

                          $ 1,929,291    $ 2,250    $ (25,746)    $ 1,905,795
                          ===========    =======    =========     ===========
</TABLE>


(5)  LEASES

The  Company  leases  various  equipment  under  non-cancelable operating leases
expiring  in  various  years  through  2009.

Minimum  future  rental  payments  under  non-cancelable operating leases having
remaining  terms  in  excess of one year as of February 29, 2004 for each of the
next  five  years  and  in  the  aggregate  are:

<TABLE>
<CAPTION>
     Twelve  months  ending  February  28,                 Amount
     -------------------------------------                 ------
<S>                                                       <C>
                    2005                                  $ 36,675
                    2006                                    36,675
                    2007                                    36,675
                    2008                                    23,837
                    2009                                     1,834
                                                          --------
                      Total  minimum  future
                        rental  payments                  $135,696
                                                          ========
</TABLE>





                                      F-10
<PAGE>

Rental expense was $34,842 and $12,838 for the years ended February 28, 2004 and
2003,  respectively.

Certain operating leases provide for renewal and/or purchase options. Generally,
purchase  options  are  at prices representing the expected fair market value of
the  property  at  the  expiration  of  the  lease term. Renewal options are for
periods  of  one  year  at  the  rental  rate  specified  in  the  lease.

(6)  LONG-TERM  DEBT

During  the  year ended February 29, 2004 the Company refinanced the building in
order  to  lower the interest rate.  The interest rate was reduced from 9.25% to
5.625%.  The  term  of  the  note  was  also  reduced  by  two  years.

As  of  February  28,  2004,  the  Company  had  the  following  long-term debt:

<TABLE>
<CAPTION>
                                                   Current     Long-Term
                                                   -------     ---------
5.625%  note  payable  to  a  bank,
due  in installments  of  $6,270.55
through  March  2013, secured  by  land
<S>                                                 <C>         <C>
and  office  building                               $45,292     $501,951

25%  capital  lease  payable
to  finance  company,  due  in  monthly
installments  of  $86  through  November
2004,  secured  by  equipment                           684            -

25%  capital  lease  payable
to  finance  company,  due  in  monthly
installments  of  $102  through
October  2004,  secured  by  equipment                  720            -
                                                    -------     --------

                                                    $46,696     $501,951
                                                    =======     ========
</TABLE>

Maturities  on long-term debt for each of the next five years and thereafter are
as  follows:

<TABLE>
<CAPTION>
                                                                   Amount
                                                                  --------
<S>                                                             <C>
                               2005                             $   46,696
                               2006                                 48,358
                               2007                                 51,037
                               2008                                 53,980
                               2009                                 57,096
                               Thereafter                          291,480
                                                                ----------
                                                                $  548,647
                                                                ==========
</TABLE>

(7)  INCOME  TAXES

Temporary  timing  differences  between the reporting of income and expenses for
financial  and  income  tax reporting purposes at February 29, 2004, result in a
deferred  tax  asset of approximately $685,000, which the Company believes to be
fully  realizable.



                                      F-11
<PAGE>

Following are the components of this deferred tax asset as of February 29, 2004:

<TABLE>
<CAPTION>
          Excess  tax  over  financial  accounting -
<S>                                                          <C>
            Depreciation                                     $  (80,000)
          Excess  financial  accounting  over  tax  -
            Accrued  contingency  costs                         306,000
          Reserve  for  bad  debts                              353,000
          Acquired  life  insurance  policies                    37,000
                                                             ----------
          Net  deferred  tax  asset                             616,000
                                                             ==========
</TABLE>

The  difference  between  the Company's effective income tax rate and the United
States  statutory  rate  and the State of Texas franchise tax rate is reconciled
below  for  the  years  ended  February  29,  2004  and  2003:

<TABLE>
<CAPTION>
                                                       2004         2003
                                                       ----         ----
<S>                                                   <C>          <C>
          United  States  statutory  rate              34.0%        34.0%
          State  of  Texas  statutory  rate             4.5%         4.5%
          Expected  combined  rate                     38.5%        38.5%
          Elimination  of  valuation
            allowance  on  deferred  tax  asset       (18.1)           -
          Additonal  taxes  assocated  with  IRS
            settlement                                  7.1            -
          Benefit  from  utilization  of
            net  operating  loss  carryforward            -        (12.8)
                                                      ------       ------

          Combined  effective  tax  rate               27.5%        25.7%
                                                      ======       ======
</TABLE>

On  Sept. 20, 2001, the Company received a notice of deficiency from the IRS for
the  fiscal  years  ended  September  30,  1993,  1994 and 1995 in the amount of
$1,755,624  in  federal income tax plus penalties of $351,124 and an unspecified
amount  of interest.  On November 30, 2003, the Company settled the dispute with
the  IRS  by  agreeing to pay total additional tax of $377,995, for all years in
dispute  and  no  penalties.   The Company accrued $377,995 in additional income
tax expense related to this settlement along with $346,570 in interest.  The tax
was  paid  on  April  27, 2004 and the Company has directed our legal counsel to
file  a  request for abatement of interest on the tax.  Abatement of interest is
in  the  discretion  of  the IRS, with an opportunity for review by the U.S. Tax
Court.  If an interest abatement is not granted to our satisfaction, the Company
intends  to  have  the  issue  judicially  reviewed

(8)  STOCK  TRANSACTIONS  AND  COMMON  STOCK  OPTIONS

On August 23, 2001, the Company issued 20,000 shares of its treasury stock to an
individual in exchange for a one-year note receivable in the amount of $155,000.
This  note bears interest at the rate of 6.5% per annum. For financial reporting
purposes,  this  note  has  been  reflected  as  a  reduction  in  the Company's
shareholders'  equity  section  similar  to  a  stock  subscription  receivable.

During the year ended February 28, 2003, the Company purchased 144,891 shares of
its  common  stock  for  $632,723.

The  Company  has  declared  and  paid dividends on a quarterly basis and in the
amounts  as  set  forth  in  the  following  table:



                                      F-12
<PAGE>
<TABLE>
<CAPTION>
          Date Declared              Date Paid              Dividend Amount
          -------------              ---------              ---------------
<S>                                   <C>                       <C>
            2/11/02                   2/28/02                   $0.025
            5/12/03                   5/31/03                   $0.025
            8/31/03                   8/31/03                   $0.025
            11/30/03                  12/15/03                  $0.035
            2/28/03                   3/14/03                   $0.03
            5/31/03                   6/15/03                   $0.03
            8/31/03                   9/15/03                   $0.03
            11/30/03                  12/15/03                  $0.03
            2/29/04                   3/15/04                   $0.04
</TABLE>

As  of  February  29,  2004 the Company has three stock-based compensation plans
which  are  described   below.   The  Company   applies  APB  25   and   related
interpretations  in  accounting  for  its plan. Compensation for services that a
corporation  receives under APB 25 through stock-based compensation plans should
be measured by the quoted market price of the stock at the measurement date less
the  amount,  if  any,  that  the individual is required to pay. No compensation
expense  was recorded during the years ended February 29, 2004, and February 28,
2003  related to its stock option plans under APB 25. If the Company had elected
to  recognize compensation based on the fair value of the options granted at the
grant  date  as  prescribed  by "Statement of Financial Accounting Standards No.
123,  ("SFAS 123") Accounting for Stock-Based Compensation", net earnings (loss)
and  net earnings (loss) per share would have increased to the pro forma amounts
shown  below  for  the  years  ending  February  29, 2004 and February 28, 2003:


















                                      F-13
<PAGE>
<TABLE>
<CAPTION>
                                                         2004         2003
                                                         ----         ----
Pro forma net earnings applicable to
<S>                                                   <C>          <C>
  common shareholders                                 $2,478,432   $1,879,144

Less: Total stock based compensation expense
  determined under fair value based
   method for all awards, net of related tax effect            -      (22,420)
                                                      ----------   ----------

Pro forma net earnings (loss) per common share        $2,478,432   $1,856,724
                                                      ==========   ==========


Earnings (loss) per share:                               2004         2003
                                                         ----         ----

Basic - as reported                                   $     0.26   $     0.20
                                                      ==========   ==========

Basic - pro forma                                     $     0.26   $     0.20
                                                      ==========   ==========


Diluted - as reported                                 $     0.26   $     0.20
                                                      ==========   ==========

Diluted - pro forma                                   $     0.26   $     0.20
                                                      ==========   ==========
</TABLE>



     The fair value of each option grant is estimated on the date of grant using
the  Black-Scholes  option pricing model with the following assumptions used for
grants:  weighted  average risk free interest rate of 2.123% and 3.056% for 2004
and  2003,  respectively;  volatility  of  40%;  and expected life less than two
years.  The  fair values of the options were based on the difference between the
present  value  of the exercise price of the option and the estimated fair value
price  of  the  common  share.

     The  intent  of  the  Black-Scholes  option  valuation  model is to provide
estimates of fair values of traded options that have no vesting restrictions and
are  fully  transferable.  Option  valuation  models  require  the use of highly
subjective  assumptions  including  expected stock price volatility. The Company
has  utilized  the  Black-Scholes  method  to  produce the pro forma disclosures
required  under  SFAS 123. In management's opinion, existing valuation models do
not  necessarily  provide  a  reliable  single  measure of the fair value of its
employee  stock  options  because  the  Company's  employee  stock  options have
significantly different characteristics from those of traded options and because
changes in the subjective input assumptions can materially affect the fair value
estimate.  The effects of applying SFAS 123 in this pro forma are not indicative
of  future  amounts.

     On  February 1, 2002, pursuant to the Company's Omnibus Equity Compensation
Plan, G. Russell Hagan Ltd. Partnership is entitled to purchase 50,000 shares of
our  common stock at a price of $4.50 per share. This option expires on February
1, 2005. This option may be exercised only upon notice of its exercise with full
purchase  price  for  the  amount  of  shares  purchased.

     On  October  1, 2002, pursuant to the Company's Omnibus Equity Compensation


                                      F-14
<PAGE>

Plan,  Compass  Settlements,  LLC  is  entitled to purchase 50,000 shares of our
common  stock  at  a  price  of  $1.86  per  share. Compass Settlements, LLC has
exercised  the  right  to purchase 28,000 shares under this option. The right to
purchase the remaining shares under this option expires on October 1, 2004. This
option  may  be  exercised  only  upon notice of its exercise with full purchase
price  for  the  amount  of  shares  purchased.

     As  of February 29, 2004, the Company had 25,720 warrants outstanding at an
exercise  price  of  $9.375  per  warrant  for  one  share each of the Company's
treasury  stock.  Of these warrants, 14,983 expire on August 27, 2004 and 10,737
expire  on  January  16,  2005.

     Information  with  respect  to  stock  options  and warrants outstanding to
certain  employees,  directors  and  service  providers  are  as  follows:

<TABLE>
<CAPTION>
                                                       2004
                                            ---------------------------------
                                             Shares               Average
                                                                  Exercise
                                                                   Price
                                             -------            -------------
<S>                                          <C>                <C>
Outstanding  at  beginning  of  year         176,220            $ 4.50 - 7.43

Exercised                                    (28,000)              $     1.86

Expired                                      (25,500)               $  (9.375)
                                             -------                ---------

Outstanding  at  the  end  of  year          122,720                 $   5.28
                                             =======                 ========
</TABLE>

<TABLE>
<CAPTION>
                             Options Outstanding                         Options Exercisable
                        ----------------------------                  -------------------------
                          Shares           Average       Average        Shares          Average
                        Outstanding       Remaining      Exercise     Outstanding      Exercise
                        At 2/29/04       Life (Years)     Price         2/29/04         Price
                        -----------      ------------    --------     ------------     --------
<S>                       <C>                 <C>        <C>            <C>             <C>
$1.00  to  $2.00           50,000             .83         $  1.86        50,000         $  1.86
$3.90  to  $5.00           47,000             1.0         $  4.20        47,000         $  4.18
$9.00 to $10.00            25,720             1.0         $  9.38        25,720         $  9.38
                          -------                         -------       -------         -------

                          122,720                         $  5.28       122,720         $  4.09
                          =======                         =======       =======         =======
</TABLE>

(9)  RELATED  PARTY  TRANSACTIONS

The  Company currently operates under an agreement with ESP Communications, Inc.
(ESP),  which  is  owned  by  the  wife  of  the  Company's president. Under the
agreement,  ESP  performs  specified  administrative  duties  on  behalf  of the
Company. Either party may cancel the agreement with a thirty day written notice.


                                      F-15
<PAGE>

The  Company currently pays ESP $7,500 on a semi-monthly basis for its services.
The  Company recorded management services expense concerning this agreement with
ESP of approximately $168,500 and $120,000 for the years ended February 29, 2004
and  February  28,  2003,  respectively.

During  2003,  the  Company advanced $162,000 to certain shareholders to pay the
required  federal  withholding  on  dividends  to  foreign  shareholders.  These
shareholders  agreed  to  repay this advance by withholding from future dividend
payments.  They  also  agreed  to  pay interest on these advances at the rate of
3.5% per annum.  As of February 29, 2004, these advances have all been repaid in
full.

(10)  EARNINGS  (LOSS)  PER  SHARE

Basic  earnings  per  share  amounts  are computed based on the weighted average
number of shares outstanding during the applicable periods. The number of shares
used  in  the  computations  were  9,474,785  in  2004  and  9,484,785  in 2003.

(11)  CONTINGENCIES

On  May  31,  2001, LPI was named as defendant in a suit brought by the State of
Texas.  Plaintiff  alleges that LPI failed to disclose to purchasers of viatical
settlements  prior  to  1997 that the purchasers could incur additional carrying
costs  in  the  form of premium payments if viators lived beyond their projected
life  expectancies.  Plaintiff  claims that the nondisclosure violates the Texas
Deceptive  Trade  Practices  Act  (the  "DTPA")  and seeks an injunction against
future violations, civil penalties, and restitution to the affected individuals.
We  filed a Motion for Summary Judgment to dismiss the case which has been heard
by the court, but the court has not ruled on our motion.  Plaintiff also filed a
Motion  for  Summary  Judgment which has not been ruled on.  Management believes
that  it did not violate the DTPA and that the applicable statute of limitations
would  preclude most of the possible claims. The Company's primary legal counsel
in this case has informed the Company that they do not anticipate the settlement
costs in  this case to exceed $300,000. As of February 29, 2004, the Company had
accrued  $300,000  for  the  settlement  of  this  case.

LPI is aware of certain instances wherein the insurance companies denied payment
on  policies  in which it arranged the settlement with purchasers. Most of these
denials  related  to  unforeseeable  reductions in face value. Face value of the
policies  in  question total $796,500. During the fiscal year ended February 29,
2004,  the  Company  paid $236,699 to these purchasers and has accrued another $
279,867  for  future  claims  that  might  arise  on  these  policies.











                                      F-16
<PAGE>


                                  EXHIBIT INDEX
                             DESCRIPTION OF EXHIBIT



       Number                        Description
       ------                        -----------

         14       Code  of  Ethics  for  Directors  and  Executive  Officers
         21       Subsidiaries  of  Life  Partners
         31       Rule  13a-14(a)  Certifications
         32       Section  1350  Certification